Reliance Defence and Engineering Ltd, the erstwhile Pipavav Defence & Offshore Engineering and now an Anil Ambani-group company, has reportedly got the bankers’ approval to exit a corporate debt restructuring exercise after reworking its loans worth over Rs 6,000 crore.

An empowered group of banks, led by the IDBI Bank, has approved refinancing of Rs 6,000 crore of loans to the shipbuilding company, paving the way for its participation in future naval projects. (Image: Reuters)

Reliance Defence and Engineering Ltd, the erstwhile Pipavav Defence & Offshore Engineering and now an Anil Ambani-group company, has reportedly got the bankers’ approval to exit a corporate debt restructuring exercise after reworking its loans worth over Rs 6,000 crore.

An empowered group of banks, led by the IDBI Bank, has approved refinancing of Rs 6,000 crore of loans to the shipbuilding company, paving the way for its participation in future naval projects, CNBC TV18 reported citing unidentified sources. The company’s shares jumped on the news, rising as much as 5% at the day’s high of Rs 67. Its shares have risen 11% in the last one month, on the prospects of easier repayment terms on its outstanding debt, and hence the opening up of new business opportunities, including contracts from government and security agencies.

Earlier last year, Reliance Defence had got an approval from the Reserve Bank of India to exit the debt restructuring exercise upon refinancing its Rs 6,800 crore worth of loans with a longer maturity of 20 years and a reduced interest rate at 11%.

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The company’s exit from the debt rejig exercise comes after Reliance Infrastructure, controlled by the Reliance Anil Dhirubhai Ambani Group, bought a 35% equity stake in Pipavav Defence & Offshore Engineering in December 2015 through an open offer, and reconstituted the board.

However, after the debt restructuring exercise, which includes conversion of Rs 650 crore of the company’s debt into equity, Reliance Infrastructure’s stake in the shipbuilder is expected to fall to 31%.

Reliance Defence, which had obtained contracts and licence to build warships, has an order book worth more than Rs 5,300 crore, including from the Indian Navy and the Indian Coast Guard, PTI had reported earlier. The company houses the only modular shipbuilding facility with a capacity to build fully fabricated and outfitted blocks.